An important pillar of Japan's foreign policy is the positive fulfillment of
political and economic roles in order to maintain peace and stability in this
region, as well as the further promotion of close relationships with the Asian
nations.

In 1981, Asia was generally stable, undergoing no drastic changes.
Nevertheless, in the midst of an increasingly severe international economic
environment, each nation was forced to cope with difficult situations. The
Cambodian problem began to show signs of a deadlock, while the refugee problems
of Indochina and Afghanistan have remained unsettled.

Under such circumstances, Prime Minister Suzuki paid official visits to the
five ASEAN nations in January, followed by Foreign Minister Ito's visits to
Korea in March and to China in April. Foreign Minister Sonoda attended the ASEAN
Foreign Ministers Conference with Dialogue Countries (in Manila) in June and the
International Conference on Kampuchea (in New York) in July. Japan was engaged
in extremely active diplomatic efforts for the further promotion of peace and
stability in Asia.

(2) Korean Peninsula

(a) The maintenance of peace and stability of the Korean Peninsula is
important for peace and stability in East Asia including Japan. Japan has made
various efforts in contributing to the relaxation of tensions in this area. As
part of its efforts, Japan attempted to deepen understanding with such nations
as China and the United States, which share a deep interest in the Korean
Peninsula, strongly hoping for the gradual relaxation of tensions through
substantial North-South dialogues. The exchange of views Japan has made with
major countries concerned from 1981 to the early part of 1982 regarding the
Korean Peninsula include the Suzuki-Reagan talks and working level discussions
with China and the Soviet Union.

As for the North-South dialogue, Republic of Korea President Chun Doo Hwan
proposed to resume the dialogue without any condition in January and June.
Furthermore, a concrete plan to realize the peaceful unification of the
peninsula was presented in January 1982. Regretfully, however, such a dialogue
has yet to be materialized. Japan feels that the various proposals made by
President Chun are constructive and pays close attention to future developments,
with the hopes of realizing the resumption of the dialogue.

(b) Japan attaches importance to the promotion of friendly and cooperative
relationships with the Republic of Korea. Consequently, it is endeavoring to
develop positive ties based on the popular supports of the peoples through the
strengthening of exchanges involving every field. The necessity to further
develop the relationship between the two countries was confirmed in March 1981
by Foreign Minister Ito and Foreign Minister Lho when the former visited Korea
to attend the inauguration ceremonies of President Chun Doo Hwan. Repeated
confirmation was made on such occasions as the Japan-R.O.K. Foreign Ministers'
Talks in August 1981 and the Japan-R.O.K. 11th Regular Ministerial Conference in
September 1981. The R.O.K. has asked for Japan's cooperation in providing
financial aid totalling $6 billion for the coming five years in order to assist
in its Fifth Five-Year Economic and Social Development Plan. This request has
become an important pending issue between Japan and the R.O.K.

(c) Regarding relations with North Korea, Japan continues to follow a policy
of developing the exchanges in trade, economic, cultural and other fields step
by step.

(3) China

(a) The maintenance and promotion of friendly and stable relations with China
represent one of the major aspects of Japan's foreign policy. The promotion of
friendly and cooperative relations with China contributes to peace and stability
in the Asian region, and throughout the world as well.

It is desirable for Japan and other Western nations that China promotes its
modernization policy and follows an open door policy. From such a point of view,
Japan has been providing as much cooperation as possible to China for the
development of its economy.

(b) In October 1981, a top-level meeting was held between Prime Minister
Suzuki and Premier Zhao Ziyang in Cancun during the occasion of North-South
Summit Meeting. At this meeting, both leaders exchanged their views which were
primarily concerned with Japan-China relations. At the same time, the two
leaders decided to make mutual visits in 1982 which signifies the 10th
anniversary of the normalization of diplomatic relations between Japan and
China.

In December, the Second Japan-China Ministerial Conference was held in Tokyo,
and candid discussions were made on broad issues including international
situations and bilateral relations. Furthermore, the plant issue which had been
a pending issue from the beginning of 1981, was finally resolved at this
conference.

(c) Meanwhile, economic relations have exhibited favorable trends, with the
total amount of trade in 1981 between the two nations exceeded $10 billion for
the first time.

The exchange of people as well as cultural exchange have continued to
increase. In 1981 and 1982, with cooperation from the Chinese side, many
Japanese orphans who were left behind in China following the end of World War
II, visited Japan in search of their families and relatives. The efforts were
well rewarded when more than half of the orphans were able to find relatives.

(4) ASEAN Nations and Burma

(a) In the recent difficult international environment, the ASEAN nations have
been able to achieve high economic growth every year by steadily promoting
economic and social development, fully utilizing the vitality of their market
economy. They have contributed greatly to the stability and development of
Southeast Asia through the unity and cooperation of the five countries. Japan
positively provides assistance to the ASEAN nations for their self-help efforts
to enhance strength both as independent nations and as a region, and supports
them in their efforts to make ASEAN an active cooperative regional organization.
Japan attaches importance to the promotion of friendly and cooperative relations
with Burma which is situated on the boundary of Southeast Asia and Southwest
Asia and which has developed unique domestic as well as foreign policies.

(b) In 1981, the situation in Cambodia began to show signs of a deadlock.
Faced with such a difficult situation, the ASEAN nations further strengthened
their solidarity aiming at a comprehensive political settlement of the Cambodian
problem. Cooperation with like-minded nations was also energetically pursued.
Cooperative relations between Japan and the ASEAN nations in numerous fields
have shown new developments following Prime Minister Suzuki's visit to the
region in January 1981.

During his January visit, Prime Minister Suzuki paid official visits to the
five ASEAN countries which was his first overseas tour following his election to
his post. He had candid discussions with the leaders of these nations on issues
related to the situation in Southeast Asia, bilateral relations, cooperative
relations between Japan and ASEAN, and so on. He summed up the achievements of
his tour at the final stop of the tour in Bangkok, Thailand, and delivered a
policy speech (called the Bangkok speech) to explain Japan's basic diplomatic
stance (see the joint press release and the Bangkok speech). The Prime
Minister's visit greatly contributed to the establishment of firm friendly
relations and enhanced mutual trust with the ASEAN nations. During 1981 and at
the beginning of 1982, notable progress was made in many areas including various
forms of bilateral cooperation and financial aid to ASEAN industrial projects
which had been promised by Prime Minister Suzuki. Earnest discussions were also
made between ASEAN and Japan on ASEAN human resource development projects and an
ASEAN regional study promotion program.

The Foreign Ministers Conference with Dialogue Countries was held in Manila
in June. Foreign Minister Sonoda participated together with the foreign
ministers of Australia, Canada, the EC (a representative was dispatched from the
Netherlands, the chairman of the EC), New Zealand, and the United States. At the
Japan-ASEAN Foreign Ministers' Conference, Foreign Minister Sonoda presented the
Japanese view on the following points, as one of the avenues to the resolution
of the Cambodian problem:

(i) in the military aspect, the introduction of
peace-keeping forces and the
phased withdrawal of Vietnamese forces;

(ii) in the political aspect, the holding of a free election under the
supervision of a U.N. team, international guarantee by major nations concerned,
and the establishment of a demilitarized zone along the Viet Nam-Cambodia
border;

(iii) in the humanitarian aspect, the promotion of repatriation of refugees,
and assistance for the reconstruction of Cambodia.

Foreign Minister Sonoda also expressed Japan's determination to realize close
cooperation with the ASEAN nations in the future for the purpose of resolving
the Cambodian issue. In the following month of July, Foreign Minister Sonoda
attended the United Nations International Conference on Kampuchea, and
positively contributed toward a comprehensive political solution of the
Cambodian issue, in cooperation with the ASEAN nations and other nations which
share the same wishes.

In addition, as part of the concrete projects for Japan-ASEAN cooperation,
the ASEAN Trade, Investment, and Tourism Promotion Center was established in
Japan in June 1981, and the Fifth Japan-ASEAN Forum was held in Jakarta in
January 1982.

(c) Meanwhile, Burmese President Ne Win and Thai Prime Minister Prem visited
Japan in April and November, respectively (see their joint communique). They not
only had talks with many leading figures of Japan including Prime Minister
Suzuki but also made inspection tours of many areas. On these occasions,
discussions were also held between Foreign Minister Ito and Burmese Foreign
Minister U Lay Maung and between Foreign Minister Sonoda and Thai Foreign
Minister Siddhi. Such visits by the leaders of Burma and Thailand further
contributed to the promotion of friendly ties between Japan and the two
countries.

(5) Indochina

(a) Cambodian Problem

In Indochina, Viet Nam's military intervention in Cambodia continued in 1981
and remained to be a factor of instability in Southeast Asia, Japan based its
policy on the fundamental position that Vietnamese military intervention
constituted a violation of the basic principles of international society that
could not be condoned, and that a comprehensive political settlement of the
Cambodian problem must be pursued. Japan adhered to the policy of continued
support for the ASEAN nations' position, and of making concerted efforts, with
these nations, at restoring peace in Cambodia with the support of the voice of
the international society.

On the occasion of Prime Minister Suzuki's visit to ASEAN, Japan reconfirmed
its basic stance of supporting the position of the ASEAN nations. At the same
time, Japan approached the Secretary-General of the United Nations, requesting
him to take necessary measures so that the United Nations could hold an
international conference on the Cambodian problem proposed by the United Nations
Resolution. The same request was also presented to Mr. Essaafi, the Secretary
General's special envoy, who later visited the countries concerned.

With such representations from Japan and the ASEAN nations, it was decided
that an international conference would be held. As mentioned above, Japan
presented an outline for a comprehensive political settlement (Manila proposal)
at the Japan-ASEAN Foreign Ministers' Conference, so that the coming
International Conference on Kampuchea (ICK) would prove to be a truly
constructive occasion. At the ICK, Foreign Minister Sonoda appealed to Viet Nam
to respond to the voice of the international society and to participate in the
negotiations for the resolution of the Cambodian problem. Japan actively
contributed to the adoption by consensus of the Declaration and Resolution, and
was elected member of the Ad Hoe Committee of the ICK.

At the 36th Meeting of the U.N. General Assembly, Japan cosponsored the ASEAN
draft resolution which endorsed the Declaration and Resolution of the ICK. This
was adopted by an overwhelming majority, exceeding those of past resolutions
presented by ASEAN.

(b) The Indochinese Refugee Problem

Even though seven years have elapsed since refugees began to flow out of the
three Indochinese countries, approximately 220,000 refugees still remain in the
ASEAN and other nations (as of the end of February 1982). Throughout 1981, it
seemed to have developed into a chronic, long-term problem.

Recognizing the fact that the problem still represents a serious issue from
the view point of humane aspects as well as a problem affecting the peace and
stability of Asia and the Pacific, Japan continued to make utmost efforts in
order to resolve the problem in 1981.

In other words, Japan provided substantial financial aid amounting to
approximately $81 million in FY1981, following the previous year's amount of
$100 million. In April, Japan expanded the resettlement target figure to 3,000
in an attempt to accept more refugees for resettlement in Japan. In addition, it
continued to extend first asylum, without imposing virtually any conditions, to
the boat people. Thus, Japan made contributions to the three major areas for
relief. Furthermore, devoted services by medical teams in Thailand dispatched by
the Japanese government and by various private groups were further appreciated
throughout 1981. As such, measures to resolve the Indochinese refugee problem
implemented by Japan were highly evaluated on an internaional level.

(6) Southwest Asia

The Southwest Asian region accounts for nearly one-fifth (approximately 900
million) of the world's population and is an important region consisting of
countries with substantial voice in such fora as the United Nations, the non-aligned movements, and the third world.

Although the region was greatly affected by the military invasion by the
Soviet Union in Afghanistan, it has witnessed some favorable trends reflecting
the stabilization of the region during the past years including the improvement
of the relations between India and Pakistan, India and China, and the United
States and Pakistan, as well as the development of regional cooperation in South
Asia.

Japan has maintained friendly relations with countries in the Southwest Asia
and is actively providing them of economic and technical assistance. In the
light of the importance of the region, Japan is determined to make further
efforts in undertaking even more active political dialogues with the Southwest
Asian countries including India and Pakistan. In the course of such dialogues,
Japan has welcomed the improvements of relations between India and Pakistan as
well as between India and China mentioned earlier, since these improvements would
contribute to the promotion of peace and stability in the entire Asian region.
Japan also expressed its hope that such trends should further develop in a
smooth manner in the future.

2. Oceania

(1) Together with Japan, Australia and New Zealand represent the advanced
democratic states situated in the Asia-Pacific region. Japan and these two
countries enjoy mutually complementary economic relations, with Japan importing
mineral and agricultural resources from Australia and New Zealand, and these two
purchasing industrial products from Japan. Furthermore, Japanese fishing boats
operate in neighboring waters of these two nations. Based on these
circumstances, Japan has maintained and developed close relations with Australia
and New Zealand both in the political as well as the economic fields.

In full recognition of the importance of trade and economic relations with
Australia and New Zealand, Japan has been promoting close and diverse bilateral
relations with these nations. Furthermore, from the point of view that
cooperation with these two countries is essential for stability and prosperity
in the Asia-Pacific region, Japan has continued to follow a policy of developing
close cooperative ties with Australia and New Zealand.

With regard to Australia, the Sixth Meeting of Japan-Australia Ministerial
Committee was held in Tokyo in January 1981 and saw the attendance of the
concerned ministers from both countries including Foreign Minister Ito of Japan,
Deputy Prime Minister and Trade and Resource Minister Anthony and Foreign
Minister Street of Australia. A significant exchange of views was carried out
during the conference which primarily centered on bilateral economic relations
and the international economic situation. Through the conference, friendly and
cooperative relations were further promoted. Furthermore, Japan has made
attempts to strengthen and deepen friendly and cooperative ties with Australia
by maintaining close discussions on not only bilateral relations but also
international political and economic issues.

As for New Zealand, Prime Minister Muldoon officially visited Japan in April
1981. Friendly and cooperative relations between the two nations were further
strengthened through top-level talks with Prime Minister Suzuki and other
events.

(2) The island nations of the South Pacific region are exerting their
self-help efforts toward nation-building while promoting regional cooperation
for economic and social development through the South Pacific Forum (SPF) and
other fora. They are also placing great expectations on Japan for economic aid.

Japan is determined to positively extend economic cooperation to these island
nations in response to their self-help efforts for economic and social
development. At the same time, Japan is making efforts to promote friendly and
cooperative relations through the exchange of people and is attempting to
contribute to stability and prosperity in the region.

(a) Japan feels it is very important that the advanced democracies of the
West should contribute to the overall benefit of the Westin the form of each
nation providing cooperation within the limits of the ability and conditions of
each nation, while maintaining close contact with each other on issues related
to international affairs so as to ensure world peace and prosperity. Japan
believes that Japan and the United States should become the core of such
cooperation among Western nations. In view of the leading position of both
nations in international society and the serious international situation, the
need to strengthen and promote friendly and cooperative relations between Japan
and the United States, which is the cornerstone of Japan's foreign policy, has
increased.

On the other hand, the United States is facing extremely difficult domestic
problems primarily related to its economy and finance in addition to the
relative decline of its national power and international position. Nevertheless,
the United States is endeavoring to maintain and strengthen its own national
power in order to fulfill its responsibilities and commitment as a leading
nation in the free world under difficult international situation. At the same
time, the United States expects its allies and friends to make more
contributions to the protection and promotion of the interest of the free world.
In particular, the United States expects Japan to do more. Basically, Japan and
the United States are sharing the common view concerning the importance of Japan-U.S. relations.

(b) The purpose of Prime Minister Suzuki's visit to the United States in May
1981 was to confirm this importance of Japan-U.S. relations and to discuss
matters related to the strengthening of their cooperative ties (see the Joint
Communique).

Prime Minister Suzuki and President Reagan exchanged their views on a wide
range of issues which are of mutual interest for both nations, including the
international situation such as East-West relations and Asia, and bilateral
relations such as the defense issues. Particularly, concerning the defense
issues, the important roles of the Japan-U.S. Security Treaty were reconfirmed.
Prime Minister Suzuki expressed Japan's intention to continue to steadily
improve its defense capabilities on its own initiative and in accordance with
its Constitution and basic defense policy, while properly taking into account
various factors including trends in Japanese public opinion, the fiscal
situation, consistency with other policies, and effects on neighboring nations.
In response to that, President Reagan expressed his understanding for Japan's
efforts in improving its defense capabilities within certain limitations such as
the Japanese Constitution, and stated that he expects Japan to continue its
efforts. Meanwhile, Prime Minister Suzuki explained that Japan's role for peace
and stability in the Far East would be focussed on the development of a broad
and positive peace diplomacy which would encompass broad areas including the
political, economic, social, and cultural fields.

Through such an exchange of views, Japan and the United States confirmed
that, while the two countries are commonly supporting the basic values of
freedom, democracy and the free market, they are close in their ties as allies
which would result in the sharing of benefit sin broad areas such as security
based on the Japan-U.S. Security Treaty and economic relations, and would
continue to cooperate with each other. They also confirmed that stronger ties
and cooperation between the two countries would be essential for the realization
of world peace and the revitalization of international society.

(2) Canada

(a) Japan and Canada not only share the similar political and economic
ideologies as advanced democratic states but they are also important partners in
the free world. There has been extensive progress in Japan-Canada relations in
recent years mainly in the fields of trade and economy. An active exchange of
the leading figures of both countries including the Prime Ministers of the two
nations has been promoted in order to establish more mature Japan-Canada
relations encompassing various fields such as politics, culture, and science.
Furthermore, both countries are striving to expand their cooperative ties as
important partners in the international arena, maintaining a common ideology.

(b) The year 1981 deserves special mention since a more active exchange
between the Prime Ministers of Japan and Canada was observed. Prime Minister
Suzuki visited Canada in May 1981 prior to the Ottawa Summit and established
personal friendly relations based on trust with Prime Minister Trudeau. Both
leaders frankly exchanged their opinions on bilateral and international issues
so that the summit meeting would end in success. Close discussions and trust
between the two leaders enabled Japan to reflect its diplomatic policies in the
agreements reached at the summit meeting held in July.

In addition, various ministerial-level meetings were held in 1981, which
included a visit to Canada by International Trade and Industry Minister Tanaka
in January, Energy Minister Lalonde's visit to Japan in October, and Foreign
Secretary MacGuigan's visit to Japan in November to attend the Second annual
Japan-Canada Foreign Ministers' Consultation. As a result, Japan-Canada
relations were further strengthened in numerous fields.

(c) Furthermore, the Canada-Japan Friendship Group was formally organized in
Canada in March 1981 which corresponds to the Japan-Canada Parliamentarians'
League. Thus, the framework for the full-scale exchange of Parliamentary members
of Japan and Canada has been established.

4. Latin America (the term 'Latin America' used in this Blue Book
includes
the Caribbean area)

(1) Latin America comprises 32 independent countries with approximately 360
million people. Blessed with vast expanses of land and abundant natural
resources, the area has a high degree of potential for future development.
Possessing many newly developed countries, Latin America is considered to be an
important area which has recently been remarkably increasing its position and
influence on international politics and the economy. Meanwhile, international
concern has been increasing on the unstable situations in some parts of Latin
America, namely in Central America and the Caribbean area just adjacent to North
America.

Latin America shares mutually complementary relations with Japan in the field
of economy, including resource supplies, trade, and investments. Nearly one
million Japanese immigrants and their descendants are playing an important role
in promoting friendly relations between Japan and Latin America.

(2) Based on the mutually complementary economic relations, Japan has
developed firm diplomatic efforts with the intention of promoting a wide range
of cooperative ties with Latin America by engaging in efforts to enhance mutual
understanding through active dialogues in the fields of politics as well as
culture.

Foreign Minister Sonoda officially visited Mexico, Argentina, and Brazil in
August 1981, which was the first visit by a foreign minister in two years, and
had fruitful talks covering a wide range of issues related to the international
situation in addition to bilateral issues. Meanwhile, Japan had received many
leaders from Latin America, including Prime Minister Seaga of Jamaica and
President Carazo of the Republic of Costa Rica. To sum up his visit, Foreign
Minister Sonoda delivered a speech concerning the present and future relations
between Japan and Latin America in Argentina, the last stop of his tour, and
enjoyed public favor.

Corresponding to such an exchange of leading figures, 30 young people visited
Japan under the Japan Study Program for Young People from Latin America which
was carried out in 1981 as well as 1980 in order to promote the exchange of
young people from long-term point of view.

In cultural field, special mention should be given to the "Ten Days of
Mexico and Japan" which was held in Mexico City from the end of May to
early June with the cooperation of the Japanese and Mexican governments as well
as private organizations. During this ten day period, a variety of events such
as the Mexican tour by Japanese sumo wrestlers, a fair featuring Japanese
machinery, a Japanese film festival, a concert, and a woodblock print exhibition
were held and the "Ten Days of Mexico and Japan" was concluded in a
great success.

In Panama, the capitals 53-B street was named "Ohira Street" in
July 1980 in honor of the late Prime Minister Ohira. Later, in 1981, a bust of
Mr. Ohira was erected in the City of Panama, and a commemorative celebration was
held in April. In July, Popular Park in Mexico City was renamed "Ohira
Park."

(3) Japan has been endeavoring to develop closer ties and promote
diversification in the field of economy and economic cooperation with Brazil,
Mexico, Argentina, the Andean nations, and the countries of Central America, and
the Caribbean area, taking into consideration the intra-regional balance.

It should be specially noted that a number of agreements concerning economic
cooperation with Brazil were concluded in 1981. In July, it was decided that
necessary assistance would be extended from the governmental organizations
concerned to meet the additional financial requirements resulting from the
reviewing of the aluminum refinery plan in the Amazon. An official exchanged-note concerning the yen loan (\22 billion) allocated to the
consolidation plan of ports and harbors was signed in November 1981. Regarding
the development plan of the Carajas iron mine in Brazil, a general agreement was
reached when Planning Minister Delfim Netto visited Japan in December to the
effect that Japan would provide financial loans amounting to $500 million. It
also deserves special mention that the contract worth $318 million was reached
through the efforts of the mission which was dispatched to Mexico to enhance
trade exchanges.

Meanwhile, aiming at the implementation of effective assistance to Latin
America, a research group for the evaluation of economic and technical
cooperation was dispatched to Peru as the first country to be taken up in the
region. The group made evaluations on the current status of economic and
technical cooperation extended by Japan to the country.

Japan also extended the yen loans or outright grants to Peru, Paraguay,
Bolivia, Guyana, Haiti, Honduras, and Jamaica, providing various forms of
cooperation to Latin America in such areas as the infrastructure, health and
medicine, agriculture and fisheries.

Japan's trade with Latin America in 1981 totalled approximately $10.5 billion
in exports, and $6.7 billion in imports, recording increases of 18% and 17%
respectively over the previous year.

5. Western Europe

(1) Japan has been following a basic diplomatic policy to strengthen
its ties with West European countries with which it shares the basic values of
freedom, democracy and a market economy. In both Japan and Europe, however, the
necessity of promoting dialogues and cooperation between them had not been fully
recognized by many people. Thus, in the triangular relations of Japan, the North
America, and Europe, Japan-Europe relations appeared to be the weakest. However,
Japan-Europe cooperative ties have become stronger following the hostage
incident at the American Embassy in Iran, the Afghanistan problem and the
situation in Poland.

In June, Prime Minister Suzuki toured Europe for the first time in eight
years since Prime Minister Tanaka's visit in 1973 and visited seven countries in
Europe, namely, Federal Republic of Germany, Italy, the Vatican, Belgium, Great
Britain, the Netherlands, and France, as well as the EC Commission. He exchanged
frank views with the leaders of each country on the issue of how Japan and
Europe should cooperate and contribute to peace, stability, prosperity, and
development in the world under the current international circumstances. The
visit was a big step toward promoting cooperation between Japan and Europe.

On the other hand, Italian President Pertini's visit to Japan in March 1982
and the French President's first official visit by President Mitterand in April
greatly contributed to enhancing mutual understanding between Japan and Europe.
Furthermore, since Japan attaches importance to the strengthening of cooperative
ties with the country holding presidency of the Council of Ministers of the EC,
the visit by Belgium Foreign Minister Tindemans (President of the EC Foreign
Ministers' Council) in February 1982 received high evaluation.

The future task remaining to be tackled in Japan-Europe relations is how such
cooperative ties can be further tightened and strengthened so that Japan and
Europe will be able to stand firmly in the fluctuating world environment. It is
important to deepen mutual understanding through the broad exchange of people
involving political leaders as well as the general public.

(2) In order to promote the exchange of people, especially of the younger
generation who will shoulder the future relations between Japan and Europe, the
3rd Study Program in Japan for European Youth took place from mid-August to the
end of September. The program was aimed at expanding the Japan-Europe relations
to the grassroot level by providing an opportunity to observe Japanese politics,
economy, and culture. Fifty young people from the EC nations and the EC
organizations were invited for two weeks, after being chosen based on essays
they had written.

(3) The Japan-EC economic relationship is facing a difficult situation, as
tension increased against the background of the serious economic situation in
the EC countries and the increase of the trade imbalance between Japan and the
EC which exceeded $10 billion in 1981.

The total amount of trade by the EC accounts for
approximately 40% of the
world figure. Thus, should protectionist pressures in the EC intensify, great
influence on world trade will inevitably occur. Revitalization of the European
economy is also very important for the development of world trade.

Based on this understanding, Japan has exerted various efforts to achieve
even more stable relations with the EC by establishing a broader foundation not
only in the field of trade but also in the form of industrial cooperation, while
explaining Japan's position through active dialogues with the EC. For example,
mutual understanding with the EC has been deepened through the above-mentioned
visit to Europe by Prime Minister Suzuki, the economic mission to Europe
dispatched by the government in October (headed by Mr. Inayama, Chairman of the
Federation of Economic Organizations), and the visit to Europe by the members of
the Special Committee for International Economic Measures of Liberal Democratic
Party, headed by Mr. Esaki.

6. The Soviet Union and Eastern Europe

(1) The Soviet Union

(a) Japan has consistently pursued a policy of resolving the issue of
Northern Territories and concluding a peace treaty with the Soviet Union, which
is Japan's one of the most important neighbor, in order to develop stable
relations based on true mutual understanding.

(b) The year 1981 was the 25th anniversary of the restoration of diplomatic
relations between Japan and the Soviet Union with the Japan-U.S.S.R. Joint
Declaration. Regrettably, the relations between the two nations are still facing
a difficult situation as a result of such Soviet actions as the military buildup
in the Northern Territories, Soviet military intervention in Afghanistan and the
Poland situation.

(c) In September 1981, Japanese and Soviet Foreign Ministers met in New York
and agreed on the necessity of dialogues between the two countries. A basic
agreement was reached at this time to hold meetings of the foreign ministers as
well as working-level consultations between Japan and the Soviet Union. Based on
the agreement, the Second Japan-U.S.S.R. Working-Level Consultations was held in
January 1982. A candid exchange of views was made on various issues including
the international situation in general and bilateral relations.

(d) Regarding the problem of the Northern Territories, which is the largest
pending issue between Japan and the Soviet Union, the Japanese side expressed to
the Soviet side its basic thoughts that the Soviet Union should go back to its
policy line expressed in the Joint Statement in 1973, that it should immediately
withdraw its military forces from the Northern Territories, and that it is
necessary to hold negotiations for peace treaty as soon as possible. In
response, the Soviet side simply expressed that there has been no problem
related to the territories and it would remain firm in its position in the
future. Furthermore, Japan pointed out that the next negotiation for peace
treaty would take place upon Foreign Minister Gromyko's visit to Japan and
requested his early visit. Foreign Minister Gromyko replied that he will study
the matter.

(e) In Japan, there has been a substantial growth in
nationwide
public opinion concerning the issue as seen in the designation of "Northern
Territories' Day" on February 7 and the observation trip of the territories
by Prime Minister Suzuki in September. In view of the nation's public opinion,
Foreign Minister Sonoda, in his general speech at the 36th UN General Assembly,
appealed the basic stance of the Japanese on the Northern Territories to the
international community in order to gain understanding. The speech was made
following Foreign Minister Ito's speech in 1980. In addition, overseas
publicity activities have been actively promoted through the compilation and
distribution of various publicity materials on the Northern Territories.

(f) Japan believes that the proclamation of martial law in Poland in December
1981 and the following events in that country have resulted from pressure by the
Soviet Union. The Japanese government pointed out the responsibilities of the
Soviet Union and requested its self-restraint. However, since there was no
indication of improvement in the following situations in Poland, the government
further strongly requested self-restraint on the part of the Soviets and
decided to implement certain measures against the Soviet Union in order to
prevent any future intervention, recognizing the importance of maintaining unity
and cooperation with Western nations. Details of these measures were
publicized by Chief Cabinet Secretary Miyazawa on February 23, 1982.

(g) Diplomatic relations with the Soviet Union are one of the most
important aspects of Japan's external relations. The establishment of stable
relations based on true mutual understanding is important also for peace and
stability in Asia. In order to establish such relations, settlement of the
Northern Territories issue cannot be by-passed. Therefore, Japan is determined
to continue to appeal to the Soviet Union for its early conclusion of a peace
treaty through resolution of the problem of the Northern Territories.

(2) Eastern Europe

(a) Japan has been promoting mutual understanding and friendly relations
with East European nations, taking into consideration the varying conditions of
each nation. Diplomatic efforts were continued in line with this policy
in 1981. For example, Mr. Honecker, Chairman of the Council of State of the
German Democratic Republic (Head of State) paid an official visit to Japan in
May as a state guest. The visit greatly contributed to the promotion of Japan-G.D.R.
relations through a deeper interest in Japan on the part of the East Germans,
enhanced mutual understandings, and resulted in the signing of a commerce and
navigation treaty.

(b) In Poland, the martial law were proclaimed throughout the nation on
December 13, 1981. Consequently, many concerned persons including key figures of
the "Solidarity" were detained, strikes and gatherings were banned,
and other severe measures were implemented. Being concerned about such
situations in Poland, Japan announced in a foreign minister's statement on
December 25, 1981 that the Polish situation should be resolved by the Polish
people themselves without outside interventions and expressed the hope that the
Polish authorities would promptly initiate democratic dialogue among all
domestic parties involved in the spirit of national reconciliation. Later, on
January 14, 1982, in view of the fact that such a situation could threaten to
endanger the relationship of East-West cooperation and exchanges which had been
pursued to date, and seriously affect the international situation, Japan urged
the Soviet Union for its self-restraint and urged Poland to put an early end to
the extraordinary state of affairs in Poland in a foreign minister's statement.
Furthermore, Japan directly expressed the afore-mentioned position of the
country to the Polish authorities on January 7, 1982. However, since no
improvements in the situation had been made, Japan announced its measures
towards Poland and the Soviet Union on February 23, 1982, under the cooperation
with Western nations. Meanwhile, Japan made it clear that the economic
assistance
already committed to Poland, would continue. The government also donated $500,000
as humanitarian assistance for Polish people.

(c) Yugoslavia has been pursuing
an independent and non-aligned policy even after President Tito passed away (May
1980). Japan highly evaluated such a policy and attempted to promote relations
through such efforts as signing the Scientific Technology Cooperation Agreement
with Yugoslavia upon Foreign Minister Vrhovec's visit in May 1981. Meanwhile,
regarding Albania, diplomatic relations were established in March 1981. All
necessary arrangements for the establishment of the Japanese Embassy
(concurrently under charge of Ambassador to Yugoslavia) were completed in
March1982, and Japan further expnaded the basis of tis diplomacy.

7. The Middle East

(1) Japan has attached great importance to the Middle East as a vital
strategic region and as a major supply source of energy. From such a point of
view, Japan has been actively promoting economic and technological cooperation
for the economic and social development of the region. In addition, Japan is
striving to strengthen friendly and cooperative relations based on mutual
understanding through the cultural exchange and mutual visit. Therefore, these
Middle East countries have recently been placing greater expectations on Japan.
As a result, Japan, whether it wished or not, began to attract attention from
the Middle East countries not only in the field of economy but also in politics.

The Middle East region is faced with various internal political problems, and
each problem has a great impact on the entire world. Japan has been exerting
efforts in providing due contributions in order to achieve stability in the area
while maintaining close contacts with nations concerned on these problems. It is
necessary for Japan to continue its efforts in order to meet the expectations
of the Middle East countries.

(2) The solution for the Middle East peace problem is an essential issue in
achieving stability in the region. The negotiations between Israel and Egypt
based on the Camp David Accords have been showing relatively favorable trends,
so far as the bilateral relationship is concerned, despite the assassination of
Egyptian President Sadat. Both countries continued the negotiations aiming at
achieving the complete reversion of the Sinai Peninsula to Egypt in April 1982.
On the other hand, concerning the Palestinian problem, although autonomy
negotiations, resumed in September 1981, after the suspension since July1980,
difficulties still exist and the situation is far from reassuring. These were
the background of the presentation of the Saudi Arabia's eight-point proposal in
August concerning peace in the Middle East.

From the viewpoint that
comprehensive peace should be realized in the Middle East in a peaceful manner,
Japan has exerted its efforts to bring about an atmosphere for peaceful
solutions by making close contact with the parties concerned in the conflict. It
was one of these efforts that Prime Minister Suzuki and Foreign Minister Sonoda
met Mr. Arafat, Chairman of the Palestine Liberation Organization during the
Chairman's visit to Japan in October 1981.

(3) The Soviet military intervention in Afghanistan which began in December
1979 resulted in great anger and uneasiness in the world since it violates
international laws and justice.

Considering that the Soviet military intervention in Afghanistan poses a
grave threat to world peace and stability, Japan has continued to strongly urge
the Soviet Union on all the occasions such as Foreign Ministers' talks at the
United Nations and the Japan-U.S.S.R. Working-Level Consultations to immediately
withdraw its troops from that country and continued to maintain a series of
measures against the Soviet Union. Furthermore, Japan maintained its positive
posture concerning aid to the refugees in Pakistan who have been facing great
difficulties as a result of that incident.

The Iran-Iraq conflict, which developed into large-scale fighting in
September 1980, has remained unsettled.

From the standpoint that an early and peaceful settlement of the conflict is
strongly in need, Japan made appeals to both Iran and Iraq at every possible
occasion to realize an early solution and supported the mediation efforts
rendered by the United Nations and the Organization of Islamic Conference.

(4)
Japan has exerted its efforts to expand the exchange of people with the Middle
East countries, with which it has enjoyed closer contact in recent years. Many
oil-producing countries in the Middle East are organized under a monarchy system
and feel a sense of intimacy with the Japanese Imperial Household. The official
visit by the Crown Prince and Princess to Saudi Arabia in February and March was
extremely fruitful in that respect. In addition, Japan is actively engaged in
the exchange of people, although in an unofficial manner, through frequent
visits by leading figures at the ministerial level.

Concerning the Middle East peace problem, Deputy Prime Minister and Foreign
Minister Ali of the Arab Republic of Egypt (September) and PLO chairman Arafat
(October, invited by the Parliamentarians' League for Japan-Palestine
Friendship) visited Japan. These visits rendered substantial contributions to
the mutual understanding between the Japanese leaders and the parties concerned
to the Middle East peace problem.

8. Africa

(1) African countries south of the Sahara number 45 at present.
All of
them except South Africa are member nations of the Organization of African Unity
(OAU). United under the organization, they have gradually been gaining a voice
in the international community. Furthermore, blessed with rich natural
resources, Africa has begun to play an important role in the world economy.

The most important task for the African nations is nation-building. With the
rise of Japan's national power, African countries' interest in and expectation
upon Japan for cooperation toward their nation-building efforts have been
growing. As a result, visits to Japan by leading figures including heads of
state from African countries have been observed in succession. Japan is making
efforts to deepen mutual understanding with African countries through such
activities as exchange of visits. At the same time, recognizing the increased
responsibility of Japan in the international community, Japan has been providing
as much economic and technological cooperation as possible in many fields for
the nation-building of African countries.

(2) Regarding the exchange of visits, Japan received many important leaders
from Africa including President Nyerere of the United Republic of Tanzania in
March as a state guest and Prime Minister Mugabe of Zimbabwe in May on an
unofficial visit. Through these visits, mutual understanding and friendly
relations have been promoted. The number of visits to Japan by leading figures
at ministerial level from African countries totalled 32 in 1981.

(3) African nations have been uniformly seeking a solution to the problems in
Southern Africa (the attainment of independence by Namibia and termination of
the South Africa's racial discrimination policy). Various efforts were made
mainly by the United Nations and countries concerned in 1981 for the
independence of Namibia, but a solution has not been attained.

As far as the South Africa's racial discrimination policy is concerned, Japan
has strongly opposed to the policy and has placed certain limitations on its
relations with South Africa. It also maintains the basic position of extending
as much cooperation as possible for attaining a fair and peaceful solution to
the vairous problems in Southern Africa. Japan has clearly expressed its
intention to extend cooperation to the civilian component of the United Nations
Transition Assistance Group (UNTAG) in case it is dispatched for the purpose of
assisting the independence of Namibia.